The Consequences of a Product Redesign

There is an infinite number of reasons why a manufacturer in any industry would choose to redesign, or remanufacture, a product. For some OEMs, such as Apple and their annual iPhone announcements, redesigns are expected, even championed, as reflections on how rapidly technology is evolving. It could also be an OEM’s attempt to rectify design flaws within the original project or tap into a wider consumer base.

More commonly in today’s marketplace, however, the redesign of an OEM product stems from a reaction to the life cycle mismatch between the product and the electronic components that are used to create it. The discrepancy is so wide, in fact, that today the life cycle of an electronic component or semiconductor is equivalent to roughly half that of the product it supports. While a single generic component transitioning toward obsolescence may not necessarily be cause for a complete redesign, a highly-specialized critical component with a limited customer base limits the options an OEM has to complete the life cycle of its product.

To put another way, when the supply of a critical components suddenly decreases against consistent or increasing demand, OEMs without a sound obsolescence management strategy are put in a difficult position that can’t be easily solved. In such cases, a redesign of the product without the need for the end-of-life component may seem like a simple solution on the surface – but before acting on this plan, it’s important for OEMs impacted by obsolescence to consider the drawbacks such a decision may have.

It’s About More than Money

The financial strain of a product redesign, even a small modification, could be far greater than the OEM realizes. In electronic-based industries, it’s not uncommon for a redesign – including conceptualization, manufacturing, warehousing, and labor — to require up to four times the original monetary investment.

But that’s just talking dollars and cents. In the eyes of many OEMs, no expense is too great if it means providing a quality product consumers can be proud to own. The irony of this, however, is that an unexpected product redesign has the potential to do anything but.

In the healthcare and aerospace industries, for example, where product life cycles can be twenty years or more, consumers expect their purchase to be supported for that entire stretch of time. If an OEM announces a premature product redesign as a reaction to obsolescence, some consumers may interpret that decision as a retraction of the OEM’s commitment to them. Such perceived breaches of trust can be difficult, if not impossible, to fully overcome, and ultimately the damaged goodwill can limit the consumer base willing to purchase future products from that OEM for years to come. Brand loyalty can be an incredibly powerful motivator – but it must never be taken for granted.

Look Before You Leap

The obvious alternative to an unexpected product redesign is to negotiate a last time buy with the OCM upon receipt of a product change notification. The window to commit to a last time buy, however, is narrowing by the year; as recently as 2015, over 40 percent of end-of-life components were accompanied by an immediate last time buy date, and only four percent of these were given a last time buy window longer than a year. If your company wishes to avoid a scenario where a product redesign must be considered, you are going to need an obsolescence management strategy that is ready to act at a moment’s notice.

EDX’s Last Time Buy Solution provides OEMs exactly that. Upon confirmation of obsolescence, we will purchase all necessary LTB inventory on the customer’s behalf — sometimes even on that same day. Then, on a schedule determined by the customer, we will distribute it anywhere in the world as needed. If the LTB inventory needs to be stored and carefully distributed over a 10-year period, then that equates to 10 years’ worth of usable capital the customer can keep on their books to hire new employees, design new products, and even expand into new markets.

There are situations where a product redesign might be necessary despite the drawbacks, but before making such a decision, take the time to weigh your options, as well as seek out new ones. You never know what you might find.

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